A real estate investor offers a homeowner $20,000 today for a 20-year option to buy their $500,000 house at $480,000, with a five-year lockout period. The option itself becomes tradable currency that can be sold to another investor or bought back by the homeowner later.
Nathan, if I gave you $20 grand right now today to fix your house that's currently worth half a million dollars and you give me the next 20 years to buy your house for half a million dollars minus what I already gave you as option consideration, I'll allow you to stay there for at least 5 more years until your kids have graduated and they're gone. I have a 20-year option I cannot exercise for the first 5 years. After that, I can exercise any time in our agreed-upon timeframe. The majority of options don't get exercised. Options are used as a currency. I could trade that option to somebody else. I could sell that option to somebody else. You as the homeowner may approach me in 2 or 3 years and say, you know what, Derek, we want to keep our house. We're back on our feet. What do we need to do to buy your option back? So it's a currency.
Why Traditional Wholesaling Keeps Failing You (Use This Pre-Flip Method Instead)
